AEB optimizes trade compliance for OSRAM
Case study

AEB optimizes trade compliance for OSRAM

AEB and OSRAM worked together to create a new IT-based platform for its export control and trade compliance processes including convenient support for checking critical end-use.

Successful around the globe: OSRAM

Since its founding in 1918, OSRAM has grown from regional leader in the technologies of its day to a global high-tech player with 27 production plants worldwide that sell products in 120 countries. From its stalwart incandescent lamp to high-tech photonics products, OSRAM, like few other companies, has learned to adapt to the changing markets around it in its more than 100-year history.

The high-tech group's portfolio now covers the entire technological spectrum of visible and invisible light. This includes lighting management systems, intelligent-networked lighting solutions and infrared and laser light for sensors that serve as the basis for autonomous driving platforms in cars or facial recognition systems in smartphones.

Considering its worldwide presence, the teaming of OSRAM, headquartered in Munich, Germany, and international compliance software provider AEB, based in Stuttgart, was a natural fit.

"Due to our global orientation, secure, efficient foreign trade processes and trade compliance are of great importance to OSRAM,’’ said Stefan Klingshirn, Export Control and Customs (ECC) specialist at OSRAM. ‘’For us, it is extremely important that on the one hand all legal requirements are complied with and on the other hand the operative business and its supply chain are not disturbed.’’

Klingshirn is joined in ECC by Andrea Dites, Head of Export Control Governance. The ECC unit and its employees are responsible for the company’s customs and export control organization and ensuring that OSRAM implements its compliance program and that it aligns with international export regulations.

Looking for a new partner

OSRAM’s ECC team faced a major challenge in 2017. "The provider of our former export control software had announced a version change at the end of 2018," said Dites. "This would cause high costs and administrative efforts that were comparable to the introduction of a new software.

At the same time, Dites said, the company realized that the new release would not result in any improvements in maintenance costs or in the quality of response and service in support.

In addition, the application was not integrated into the SAP® system, another factor that made OSRAM want to look for a new compliance software solution.

"All in all, there was great potential to make data exchange and our processes leaner and more transparent through improved integration into our ERP systems and thus to sustainably reduce the effort with new software," says Klingshirn. "It was clear to us very quickly that we were now on the lookout for a new solution.’’

Tough requirements, tight schedule

In the spring of 2017, OSRAM started selecting suppliers that could meet its very high requirements. The company was looking for a solution that would support sanctions list checks, export controls and the administration of export licenses. And not only for OSRAM’s European sites, but also internationally in more than 50 OSRAM companies worldwide. 

"This meant that the software also had to support trade compliance checks for areas of law such as the USA, China, Mexico, Canada and Malaysia," says Dites, adding that a long list of criteria played a role in the ultimate selection.

"24/7 availability, technical and specialist support for our users and compatibility with the future SAP S/4HANA® system were also important for us," adds Klingshirn. "Due to an ambitious time schedule, we were also looking for a solution with low implementation effort that was easy to use and understand in order to keep the training effort as low as possible. After a conception phase at the end of 2017, the solution had to be implemented in the first half of 2018 and, after an integration and test phase, had to go live on October 1, 2018.‘’

End-to-end trade compliance with AEB

AEB's export control solutions deliver comprehensive security for your business with always available and up-to-date software for Compliance Screening, License Management, Export Controls, and Risk Assessment. In the cloud and integrated in systems such as SAP®, Salesforce, or Microsoft Dynamics 365.

Integration into the SAP® landscape

After an intensive evaluation phase with various providers, OSRAM finally opted for the Compliance Screening, Export Controls, and License Management solutions from AEB SE in Stuttgart.

"What convinced us at AEB above all was that the software could be deeply and seamlessly integrated into the five SAP® ERP systems of our different regions and business units," explains Miroslaw Kalinay, an IT project manager involved in the decision.

In addition, AEB was able to meet international requirements and offer extensive options for sanctions list screening. In addition, AEB software also covered the issue of sanctioned ownership, i.e. checking whether a ban on indirect provision exists. And the solutions from the Stuttgart-based software company support OSRAM's IT strategy of moving away from its own server landscape to applications from the cloud.

Solutions in use worldwide

OSRAM and AEB drew up a plan for the international introduction on the basis of the tight timetable.

"We defined the central logic of how processes run in a kind of copy template," explains Sebastian Rothe, project manager at AEB. "We developed and tested these in the first months of 2018 and took them live at the beginning of April for the OSRAM Opto Semiconductors division's first SAP® system."

As the implementation progressed, this template was rolled out to a new region or area about every six weeks with only minor adjustments: In June, the SAP® systems for Europe and Asia were connected, in August it was the turn of the NAFTA region and finally the central HR system. "Although we put existing processes to the test in detail and made some adjustments to improve efficiency and effectiveness, we were able to keep to the tight schedule," says Klingshirn, with satisfaction.

In autumn 2018, the replacement of the existing solution and the switch to the AEB software took place on time. One reason why the tight schedule could be adhered to: The AEB project team was on site in Munich and thus close to OSRAM. "This enabled us to always provide fast and direct project support," says AEB’s Rothe. The solution is now being used by experts at OSRAM's Munich headquarters as well as in the regional export control, customs and business unit teams.

Sanctions list screening

AEB software compares the addresses involved with the relevant restricted party lists within Finance (FI), Human Resources (HR), Materials Management (MM) and Sales (SD) in the respective OSRAM SAP® system. Only in the event of a hit do the employees notice the screening activities. If one of the addresses can be found on one of the denied party lists, the solution starts a predefined workflow, blocks the affected process, and sends an e-mail to the person responsible.

A special feature at OSRAM is that the company also checks bans on indirect provisions. These prohibit money or economic resources from flowing not only to a sanctioned company itself, but also to other companies "controlled" by the listed company. In addition, the scope of the audit is enormous: OSRAM matches up to 1 million prohibition addresses due to its international presence.

Export control checks

With the Export Controls software, OSRAM checks the countries and goods involved in business transactions for existing bans and approval requirements. In addition to the legal areas DE/EU and US-EAR, this is also done for other legal areas such as Canada or Malaysia on the basis of so-called "manual restrictions":

These also make it possible to store further worldwide as well as internal company-specific legal requirements along with different experts (e.g. value, country constellation, goods tariff number, coding, material number, customer etc.). These can be seamlessly integrated into the standard inspection, blocking and release process without programming effort.

Managing export licenses

OSRAM uses AEB's License Management software to check whether existing, deposited export licenses can be used for export control checks. If this is the case, the system automatically suggests a use. If licenses are subject to conditions, these conditions can also be managed in the AEB application. 

The advantage: You can configure approval types for all countries and industries yourself. And by recording the export licenses at a central point in the company, OSRAM keeps track of all existing licenses and license conditions to be complied with - for all locations and all legal areas.

Directly in SAP®

All solutions are also implemented in the OSRAM SAP® systems. The integration is achieved exclusively through standard SAP® user exits and customer exits. This makes it easy to update both OSRAM's SAP® systems and the AEB software. All development objects created under ABAP® objects are generated in the AEB namespace. 

OSRAM also has the option of using Business Add-Ins (BAdI) to individually adapt your system. Central administration is also implemented. Users remain in the familiar SAP® software interface. Data is automatically transferred and, if required, stored in optical corporate archives via ArchiveLink.

New development with prototypes

AEB was also able to support OSRAM in another challenge: To develop new software that supports end-use checks. Previously, OSRAM had used a system developed by the previous supplier.

This second project started in February 2018 and was delivered for testing in August. Since the solution would not only be used by OSRAM trade compliance experts worldwide, but also by many different employees, both project partners paid great attention to user-friendliness during the new development.

"Information on the end use of our products is usually only available to the local decentralized sales unit," explains Dites. "Nevertheless, it is essential to ensure that we check the end-use and use of our goods, document this check and ultimately act in compliance with the law. That's why the software should be as easy and intuitive as possible to use, both for us as a specialist department and, above all, for our colleagues on site."

In order to achieve this, later users were already involved in the development of the solution - especially when it came to interface design. They tested numerous prototypes and gave feedback on the designs, which were then corrected and refined until the final design of the software was defined.

Support through digital questionnaires

The AEB solution Risk Assessment has been in use since October 2018 and helps OSRAM to reliably perform end-use checking worldwide, addressing the concerns of regulators. "We have stored multilingual questionnaires in the software, which every sales employee worldwide must fill out for new customers or projects," said Dites, explaining how the solution works.

As a first step, the questionnaire contains the names and addresses of the partners involved in a transaction. Based on this, an embargo and sanctions list check is carried out directly. The sales representative then has to answer a few brief questions, such as whether a possible delivery is related to a military end-use. Depending on the countries involved, special land notices may be added.

Immediately afterwards, the employee receives a risk assessment; the completed questionnaires are stored centrally and can be retrieved by the export control officers. If a warning is issued, a follow-up process is triggered. An internal workflow ensures that the ECC makes an assessment and later a release of the respective process.

In addition, the software helps to improve transparency by making all checks available in a structured manner in one place and protecting them from later changes. This also pays off in the case of external audits, for example, when the necessary documents have to be made available.

A further advantage: The solution supports the approval process directly by making the completed questionnaires available as pdf documents, which already have comment and approval fields. "Risk Assessment is a great solution for me to efficiently, transparently and securely manage end-use checking in export control," says Dites, summarizing the benefits of the new software.

Millions of check transactions

Overall, the AEB solutions have also proven themselves at OSRAM. They are now running completely in the private cloud of the ISO-27001-certified AEB data center in Stuttgart. Redundant data storage and emergency plans ensure the security of data and applications. 

And the AEB data and content service ensures that OSRAM has up-to-date, legally compliant software while at the same time requiring little maintenance. If, for example, sanctions lists or embargo regulations change, AEB automatically updates them in the corresponding solutions - without the IT department at OSRAM having to worry about it.

"A special feature is certainly the size of the installation and the volume at OSRAM," says AEB project manager Rothe. "Every year, our solutions perform several million sanctions list and export control checks. Despite these volumes, the software runs reliably and with high performance, so that OSRAM benefits from greater transparency, efficiency and security."

Klingshirn and Dites also draw a positive conclusion: "It was a very entertaining project, which was a lot of fun thanks to its dynamism, short decision paths, cooperation on an equal footing with partners and the quickly coordinated team. In the end, with AEB, we now have the right software support to meet our high trade compliance requirements.

Keep a watchful eye on end-use risks

AEB's Risk Assessment enables everyone in your organization to quickly and easily contribute to export controls and enhanced security for your business transactions. The solution provides digital checklists and questionnaires and delivers transparency for your compliance team.